The owner of a lot near the old Chronicle site is seeking an injunction to let it start building a link to the tunnel system through the basement of that building.

The owner of a lot near the old Chronicle site is seeking an injunction to let it start building a link to the tunnel system through the basement of that building.

Photo: Jerry Click, HP Staff

Downtown developers spar over tunnel access

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One of the city's biggest developers is in court this week as a judge works to determine whether it is trying to hinder a competitor's access to downtown's vital tunnel system.

Theater Square LP, an entity affiliated with the Linbeck construction family, is suing the owners of the former Houston Chronicle building at 801 Texas that is controlled by the prominent Hines development firm. Hearst Newspapers, the Chronicle's parent company, also is a defendant.

Theater Square owns a parking lot property a block north but says it intends to build a garage and, eventually, a high-rise on the site. Officials this week are asking a state district judge for a temporary injunction that would allow it to begin construction of an underground tunnel that would connect the property with downtown's existing 6-mile pedestrian tunnel system.

If the lawsuit is successful, Hines would be responsible for protecting that tunnel segment from any potential harm during demolition of the 10-story former newspaper building and any other development plans for the site.

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Both sides say they would like to see their respective sites developed with high-rise towers. Key to the success of many downtown buildings is access to the tunnels that run 20 feet below the surface and connect 95 city blocks while hosting a wealth of retail, restaurants and other office space.

The Linbeck entity's property is bounded by Preston, Prairie, Milam and Travis. Its proposed tunnel would run south, below the Hines property. It says it has an agreement stating that it owns easements through the basement of the former Chronicle building for purposes of constructing a tunnel. The agreement, it says, was put in place in late 2007 with Hearst and is binding with subsequent owners.

The Linbeck entity said it is in the initial phase of developing its site with a retail and parking structure on the southern half of the block. The city has approved its foundation permit. Plans include a high-rise as a second phase to the project.

A representative testified that the project will finalize its financing in the next few weeks. He stressed, however, that guaranteeing tunnel access will be key for the success of any projects on that property.

Ron Franklin, attorney for the Linbeck entity, argued that the 801 Texas owners want his clients to wait until Hines is ready to build its tower before tunnel construction can begin.

"This is about competition before my client is able to turn the dirt," Franklin said. "That makes a world of difference as far as competition."

He also argued that Hines is protecting the tunnel connector between 717 Texas, which connects the Calpine building to the Chase Tower tunnel system and to 801 Texas. He said the company should do the same for any tunnel from the Linbeck site.

"They want to control the timing of our project," Franklin said.

A Hines representative testified that protecting the 717 Texas tunnel was expensive and the same or similar measures for a future tunnel would be even more expensive.

"They have built and altered our landscape," Franklin said of Hines, referencing the signature downtown skyscrapers developed by the nearly 60-year-old firm. "But they don't get to build them all. We have done this by the book at every juncture."

Hines' attorneys argued that there is no tunnel access currently connecting the two properties and there is nothing for a potential pathway to connect to. The tunnel would be created and protected, at Hines' cost, for a surface parking lot, which it has been since the 1990s despite years of attempts to finance a project there. Another attorney for Hines called the idea of developing on that site a "fairy tale" and said Hines is not in the business of buying a "mothballing property."

Hines wants to demolish the current structure and eventually redo the existing tunnel connector in a way that makes sense for the foundations. Hines and a group of investors purchased the Hearst property at 801 Texas last year for $54 million, testimony showed. Attorneys said the property was purchased for a "high-grade, Class A skyscraper."

Bill Kroger, who also represents Hines, said the complex negotiations between the property owners over tunnel agreements require the developers to clearly define all the work to be done.

"Their plans cause massive negative impacts to the cost and what we want to build," Kroger said. "... We are not willing to gut what we want to do with the building."

Court documents filed by the defendants, including Hearst and the investor group led by Hines, contend that the tunnel plans submitted by the Linbeck entity two years ago were "preliminary and conceptual in nature." The documents say those plans did not satisfy the terms of the 2007 agreement with Hearst because they did not clearly define all the work to be done.

The defendants also argued, in court and in the documents, that the parties had even agreed that in the likely event the Chronicle building was demolished, the preliminary plans would be changed.

A representative for Hines said during the hearing that its construction there could begin as early as fall 2017 and architects are being interviewed.

The judge is set to decide on the temporary injunction in the next few weeks. A trial over the tunnel connecting the two properties is scheduled for January.